new-horizons-jul2009-eng

NEWHORIZON | July 2009 July 2009 | NEWHORIZON Page 3

They say anything’s possible when we set our hearts and minds to it. At EClOF we create the conditions for clients to find new possibilities

I was visiting Sri Lanka recently when I talked about a disabled musician in Uruguay who we have helped make a living. And it immediately struck me. Microfinance is about creating possibilities for people who may feel they are running out of options. Part of our job is to help our clients believe “I can do it” and “I’m worthy of a better life”.

When you’re at the bottom of the economic ladder, few things seem possible. You can’t upgrade your house. You can’t afford medical treatment. And you can’t send your children to school. If you do try to improve your precarious finances, you’re up

against loan sharks who’ll fleece you or banks who’ll show you the door.

This is where ECLOF comes in. We loan our clients money at fair rates, and we advise them on business and we help them understand money and become better entrepreneurs.

ECLOF’s staff around the world - especially our loan officers - work in sometimes “impossible” conditions. Every day, they’re venturing into no-go areas. They’re navigating dangerous roads to visit distant clients. And they’re among the first to go back to zones hit by cyclones, floods and tidal waves. In short, our loan officers step inside their clients’ shoes.

This issue of New Horizons once again showcases partnerships between ECLOF and its clients around the world – partnerships that make the impossible possible. You can read about:

• a family of seven that has carved out a business in a tough neighbourhood of Colombia’s capital.

• farmers in Uganda who are making good money from organic vanilla

• a Sri Lankan woman whose shoemaking business now employs 12 people

• a Jeepney driver in the Philippines who escaped the clutches of loan sharks

• a single father in Peru who, at almost 50, has started a sausage making business

• a seamstress in Tanzania who shares the fruits of her success by taking in women in distress.

At ECLOF we are delighted to help these people overcome their marginalisation.

Our daily contact with them reassures us that what we do is relevant. I hope you will enjoy their stories as much as we have!

Irene Banda Mutalima,Executive Director

Director’s MessageMaking dreams possible for the world’s poor

ReflectionHelping African NECs grow wisely

African NECs could learn some tips from the early church, to help the needy get their fair share

National ECLOF managers across Africa have met in Moshi, Tanzania in June 2009 to discuss how to manage their growth. And we could learn a few tricks from the apostles who helped the early church expand nearly 2000 years ago.

1. They spoke the people’s languageDuring the Feast of Harvest (Pentecost), Jews scattered throughout the Diaspora came to Jerusalem to celebrate. At one such feast, Jesus’s disciples spoke in the native tongues of all the Jews from diverse backgrounds. Peter shared the salvation message and converted 3000 people. 2. They gave selflessly and were honestConverts were convinced Jesus was about to have a second coming. Over several months, they lived in communes, sharing food and possessions.

So how did the disciples ensure there was enough to go round? They gave selflessly (Acts 4:35-37) and ruthlessly punished dishonesty (Acts 5:1-11). Thus, the portfolio quality stayed up!3. They rooted out unfairness Back then, their management information system(MIS) was good old gossip! Before long, the disciples heard that Greek-speaking Jews were losing out on their share. The disciples met and chose seven men to handle the task of poor relief.

These first office-bearers were chosen for their good reputation, their wisdom (or know-how) and for being full of the Spirit. It was hardly a glamorous job. Taking care of the needy was hard work. But it did pay off with an increase in Christian witness.

So how do we broaden our funding base across Africa, and position ECLOF for growth? Here are some suggestions:1. Hire efficient staff with honed credit intuition 2. Set them performance targets3. Monitor them to target the entrepreneurial poor4. Root out and ruthlessly deal with dishonesty

that erodes the portfolio quality5. Get a very efficient MIS.

Albert Essamuah, ECLOF International Board member and Chairperson of ECLOF Ghana

See eclof.org and the next issue of New Horizons for a report on the Africa workshop.

Contents

New Horizons is published by ECLOF International and distributed without charge among ECLOF members and other interested parties who request a copy. New Horizons is printed in English and Spanish and is available online at www.eclof.org in English, Spanish, French and German. The opinions expressed in New Horizons do not-necessarily reflect the positions of ECLOF.

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ECLOF International

P.O. Box 2100 1211 Geneva 2, Switzerland

Telephone: +41 22 791 63 12

Fax: +41 22 710 20 05

Website: www.eclof.org

E-mail: [email protected]

Coordination at ECLOF International: Roger Said

Editor: Kath Burke www.kathburke.com

Designer: Andy Mattock, www.origin8creative.co.uk

Print: Wyndeham Grange

Spotlight: Bolivia 4-5

Bolivia’s poorest farmers are growing organic quinoa, installing solar panels and leasing dairy cows

Meet the clients 6-10Tanzanian housemaids retrain to knit sweaters 6

Uganda’s vanilla farmers earn up to 20 x more 6-7

Corn dough snacks earn family new home 8

Sausage-making sizzles in Peru 9

Mother makes shoes to pay for schooling 10

Partnerships 11Philippines food security impresses partners 11

Hot topics 12-13Bright outlook for microfinance 12

ECLOF news & people 14-15People moves 14

Kenya ECLOF collects for starving millions 15

Back story 16Jeepney driver builds up his fleet 16

4-5 BOLIvIaHardy farmers fetch a great price on organic quinoa

6-7 UGaNDaClued-up vanilla farmers boost yields and income

12-13 FINaNCIaL CRISISRecession calls for cautious optimism

Microfinance is about creating possibilities for people who may feel they are running out of options

If you would like to comment on an article, or you have an idea for the magazine, please email [email protected] or [email protected]

On the cover: Arlene Hermoso, a Filipino rice farmer visited by ECLOF partner Bread for the World, see page 11. (Photo by Christof Krackhardt/Brot für die Welt)


Some of latin America’s poorest farmers are building a better life with help from EClOF

ECLOF is helping Bolivia’s farmers grow higher-value crops, move into dairy farming and generate their own electricity.

ECLOF Bolivia – called ANED – has launched some innovative loan products to help farmers grow organic quinoa for export, lease higher-yield dairy cows and install solar panels.

Bolivia’s indigenous farmers are some of the poorest and most isolated in the world. Although rich in mineral and energy resources, Bolivia has a wide gap between rich and poor. Two in three Bolivians are of Indian origin, most of them scraping by as farmers, miners, small traders and craftspeople.

ANED helps the rural poor through microleasing, microwarrants, money transfer and risk capital.

Here we showcase three ways ANED is working with partners to help rural farmers prosper.

High hopes for Bolivia’s farmers

SPOTL IGHT

Solar power helps children do their homeworkHouseholds helped: 17,000Loan value: US $150,000 Region: Bolivia-widePartner: Bolivian Government Project launched: November 2006Useful website: www.idtr.gov.bo

“Thanks to this loan we now have light and energy – and our children can do their homework in peace.”

Elisban Huisa, 32, who borrowed US $310 over 2 years.

Solar power is ideal for Bolivia’s farmers who live miles from the mains under dazzling blue skies. The alternative is reading by candlelight, or carrying a car battery into town to get it recharged for a fee.

The Bolivian Government estimates that about 700,000 rural households are without power. So it has launched a campaign to install up to 17,000 solar panels all over Bolivia by 2012.

ECLOF is helping the Bolivian government finance large numbers of solar panels. Under the programme, ECLOF lends the farmers money to buy solar panels, which act as security for the loan. So far, ANED has loaned 5000 rural farmers money for solar panels, across 7 out of 9 departments.

Before the Infraestructura Descentralizada para la Transformacion Rural (IDTR) scheme, ANED lent farmers money individually for solar panels.

A typical solar power system includes a 22-75 Watt panel that charges a battery while the sun shines. At night, the battery can power 3 compact fluorescent (energy-efficient) lights, a mobile phone charger, a radio and a TV.

Dairy farmers lap up over twice the yieldFamilies helped: 11Loan value: US $18,000Region: Sucre in the eastPartners: Christian support organisation Food for the Hungry InternationalProject launched: August 2008Useful website: www.fhi.net

“Thanks to ANED, I have replaced my cattle with better breeds which give me 20 litres of milk per day instead of 8 litres.”

Dairy farmer Julio Quispe, 35. Mr Quispe borrowed $US1693 over 18 months.

Mr Quispe is one of 11 dairy farmers in Tomoyo who are thriving since they’ve begun leasing cows from ANED. Microleasing is normally used for machinery and equipment, rather than for livestock. But ANED is testing the concept of leasing cows instead.

The Tomoyo farmers have leased 15 pregnant cows from ANED over an 18-month term. Once they have paid up, the farmers can keep their cows and calves.

ANED runs the pilot project with Food for the Hungry International, which provides a veterinary service and technical support. If the project is proved to help farmers, 30 more places will be added in the next tranche.

Key facts: ECLOF Bolivia (ANED)*

• US $12.6 million in loans outstanding• Over 80% of loans to people in rural / remote areas• Nearly half of ANED’s 12,145 clients are women• 42 branches across 8 of Bolivia’s 9 departments

(covering 90% of the population)• 134 staff• Founded in 1978 by 11 social organisations• Since launch, ANED has lent clients nearly US $100 million

See www.aned.org for more details

Organic quinoa boosts farmers’ incomeFamilies helped: 700Loan value: US $1.1 million. Plus US $100,000 in technical helpRegion: 13 towns in the Southern plateauPartners: microfinance organisation CIDRE and AUTAPO, a university-backed foundation.Project launched: July 2005 (ended July 2008)Useful website: www.cidre.org.bo

“I have twice extended my quinoa fields to 12 hectares. The yield is now about 30,000 kg. The extra income has covered my debts and paid for our family’s expenses.”

Ayda Mamani de Cruz, 41, borrowed US $3,000, repayable over 2 years. Her harvest has doubled with a new annual income of US $19,000.

Farmers from Bolivia’s high plateau are making a better living from growing organic quinoa for

export. Certified organic quinoa carries a large premium over grown produce.

Protein-rich quinoa is a staple food in the Andes. But farmers barely cover costs on the surplus they sell because urban Bolivians prefer wheat to quinoa.

Since July 2005, two universities in south Bolivia have been helping farmers, wholesalers and shopkeepers take organic quinoa to international markets. The AUTAPO Foundation – set up by the universities of Potosi and Tarija – has given technical help and money.

ANED has loaned farmers money with help from fellow microfinance institution CIDRE (Centro de Investigación y Desarrollo Regional – Centre for Regional Research and Development).

Farming is a harsh life in the stunning southern altiplano. It’s over 3,000 metres above sea level, temperatures fall below freezing most of the year. And the annual rainfall – most of it hail – is a mere 12cm. The winds are fierce and the sun is blinding. And the alkaline soil is often encrusted with salt. Luckily, these are perfect conditions for growing quinoa.

Julio Quispe has leased two Holstein cows

from ANED. These are the world’s

most productive dairy cows,

yielding 18-20 litres of milk a day

Bolivia at a glance

Full name Republic of Bolivia

Population 9.7 million (UN, 2008)

Capital Sucre (official), La Paz (administrative)

Area 1.1 million sq km

Major religion Christianity

Life expectancy (UN) Men: 63 years Women: 68 years

Main exports Soyabeans, natural gas, zinc, gold, silver, lead, tin, antimony, wood, sugar

Gross national income per head US $1,260

Source: bbc.co.uk

Ayda Mamani de Cruz is fully paid up and is

making a good living farming

organic quinoa

BRAZIL

ARGENTINA

PERU

PACIFIC OCEAN

BOLIVIA

picture: Sean Haw

key

* as of 30 April 20

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A group of former housemaids in Tanzania are supporting their children by knitting cardigans for school uniforms.

Glory Group shows the women how to use knitting machines and feeds and houses them with their children until they’re trained up. The Group is made up of 28 former housemaids in Arusha. Most of the women - aged 13-19 - fell pregnant while in service and were abandoned by their babies’ fathers.

Chairwoman Vicky Mziray recovers some training costs through the women’s wages. Each woman gets paid based on the number of sweaters she can make in a day – generally between five and nine.

This gives her a daily wage of between T SH 2500 and 4500 (that’s US $2 – US $3.50 a day, which compares well with Tanzania’s gross national income of US $400 a year).

“All of us in this project are disadvantaged girls. We were housemaids in different families and ended up being impregnated by men who neglected us and our children,” say the Glory Group women.

“Thanks be to Mrs Mziray, we can now afford our rent, food, clothes and medical bills for our children.”

Through Glory Group, Vicky is on her second loan of TZA Sh10 million (US $7,600) over 18 months. She is buying 18 knitting machines and threads with the money.

The women are helping Tanzanians save on expensive imported garments. Until Vicky trained in sweater-making in Nairobi, and brought back her skills, school uniforms had to be imported from neighbouring Kenya and Uganda.

Vicky, who is married to John and has three grown-up children, is grateful for ECLOF’s help in empowering Tanzania’s abandoned ladies.

“ECLOF is part of us. The staff keep on sharing with us, advising us and together we plan the way forward,” says Vicky. “We came to ECLOF because they listen to us. They always have time for us. Thanks be to God that, even poor as we are, we can get credit from ECLOF.”

Single mothers knit a future for their children

Vicky Mziray has been teaching

young mothers to knit sweaters since 1998. She

got the idea while volunteering for

a local church project

MEET THE CL IENTS

Some of Uganda’s poorest farmers have increased their income ten fold or more by moving into organic vanilla farming.

ECLOF Uganda has helped 723 poor farmers get organic certification for their vanilla, through a partnership with a company that cures and exports the organic beans.

In tandem with Coetzee Natural Products, ECLOF has helped many smalholders boost their earnings to US $40 a day – a good 20 times the typical earnings for a poor subsistence farmer.

Vanilla farming is a big investment because you can’t start harvesting vanilla pods until the plant is three years old. And curing the pods takes three months before they’re ready to sell.

ECLOF buys the harvest off farmers while Coetzee cures the vanilla, tests its quality and finds an overseas buyer.

ECLOF has lent to U Sh125,840,000 (US $60,000) to farmers across the Coetzee project, which runs across five districts near the Ugandan capital Kampala.

ECLOF Uganda’s Executive Director Naate Masangazira says it’s important to help farmers grow cash crops.

“Most Ugandan farmers are the poorest of the poor - consuming everything they produce,” he says. “This is why we’ve intervened to help them improve their livelihoods.”

Under the deal, Coetzee employs field staff

who inspect the farms to make sure they are up to international organic standards. Coetzee cures the raw beans, tests them for moisture and vanillin content, and gives German clients the samples they need to check the beans conform to European import criteria.

Coetzee’s Managing Director Gordon Jones says training farmers in the best ways to improve their vanilla yields also helps them get more out of their land generally.

“We show them a tidy farm that looks good. We show them how to work at the right time, and get more yield from the farm, how to make good compost out of manure, and how to trail the plants from a small tree,” he says.

“This can help them get up to 25 per cent more yield from their crop.”

Life is sweet for Uganda’s vanilla farmers

Reaping the benefits: farmers are earning up to 20 times their old

income – thanks to an organic vanilla

project

Vanilla farming has transformed Damulira Dithane’s life over the past year. Damulira, who is part of the Magada farmers group now has a new house, has bought two cows and some land and is sending his children to good schools. Banks won’t lend him money, he says, because he lacks land titles as collateral.

“Before I started vanilla farming, we used to live miserably in a small mud and wattle house with little hope of ever getting enough food,” he said.

“I’ve now managed to buy two Friesian cows, which provide milk for my family. We sell the surplus. We have got 10 more acres of land and I send my children to reputable schools. I’m well connected with a new cell phone. And my greatest achievement has been to move to a newly built house.”

Damulira, 64, and his wife Nanfuka, 48 have 10 children aged from 17 to 28.

ECLOF Uganda has lent the 33 members of the Magada Farmers Group U Shs 3,300,000 (US $1,750) to pay back over 12 months.

Hard work pays off for Damulira

Damulira Dithane tends the vanilla vines on his farm in Uganda

Vanilla secrets

Vanilla is a creeper vine related to the orchid, introduced to Uganda in 1912. Ugandan farmers started growing vanilla for export in the 1930s.

A well-tended vanilla plant will produce two harvests a year for up to 10 years.Because it’s native to South America rather than Africa, the farmer has to hand pollinate each flower. That could mean pricking the stamens of several hundred flowers with a pin every morning.

The sweet smelling extract we know from desserts comes from the green vanilla bean. Vanilla essence has about 60 chemical elements in it. Curing starts by heating the beans up for several minutes to release enzymes, and then putting 10kg at a time in a blanket in a sweat box. The beans get a daily 15-30 minute sunbathe for the next three months until enough vanillin is produced.

Farming: hard facts of life

• ECLOF helps 2,043 Ugandan farmers improve on a typical US $1 - $2 a day income• Warehouse receipts from ECLOF Uganda helps coffee growers, maize growers

and vanilla farmers get credit• Most farm workers are women, growing their own food. 70% of farm produce is

eaten locally – eg plantains, cassava, sweet potatoes, and bananas • 81% of employed Ugandans work on farms• Farmers produce 36% of Uganda’s gross domestic product and 31% of exports• One-third of Uganda’s land is farmed


A Colombian woman supporting her blind husband and six children has doubled the family’s income with ECLOF’s help. The family has now moved out of a one-bedroom tin shack and into a two-bedroom home with its own bathroom and water tank.

Doris Martinez is on her ninth loan cycle with ECLOF Colombia, boosting the family’s income to US $200 a month.

Life has been tough for the Martinez family since moving to Ciudad Bolivar, a crime-ridden part of Bogota a few years ago.

But things looked up in 2006, when enterprising Doris joined a solidarity group for street vendors. Since then, she has repaid loans, ranging from US $80 to US $160. The group called Vendedores has six members.

In 2006 she was walking the streets selling tamales, a popular Latin American corndough snack. And her husband Jose sells jellies and sweets as a street vendor, guided by his children.

Doris specialies in tamales from Tolima, her native province. Last year, Doris saved up enough to set

up a bustling corn dough stand, where she serves coffee and sweets and charges customers by the minute to use her phone line.

“We have a solid place to do our business and we are finally living in a worthy place,” says Doris. “We would like to emphasise the flexibility, opportunities and support offered by ECLOF’s credits. Now we want to grow even more. Our dream is to own and run a little supermarket and to put the finishing touches to our house.”

Enna Sofia Lemus Canon, director of the Ciudad Bolivar Branch of ECLOF Colombia says Doris has been an excellent repayer.

“In these two and a half years, we have observed how the loan has improved her business and the conditions her family live in,” says Enna.

“This is an incentive for us too, to keep supporting them in realising their dreams.”

The Martinez fled to Bogota from neighbouring Tolima province, when guerillas threatened their lives. Colombia has been ravaged by a decades of violent conflict involving outlawed armed groups, drug cartels and hostage-taking.

Some three million people have had to flee their homes because of the fighting. The UN says that many such people end up living in shanty towns around the cities, where they have little access to healthcare or education.

Family builds new house with corndough sales

Doris Martinez’s talames stand

sells sweets too. ECLOF helps 100

displaced families like the Martinez get a foothold in

Bolivar City

MEET THE CL IENTS

A single father has gone it alone as a sausage maker selling specialities from his native province.

Single father Edmundo Campos was 49 when he started out as an independent sausage-maker in 2007. He now competes with big factories to sell spicy Iberic Chrorizo to exclusive bakeries, bodegas, supermarkets and cafes.

Edmundo moved to Lima from his native Huaral as a teenager. And he sold sausages for the sausage factory “Embutidos Huaral”, and later dealt their products.

He got the idea for the business when a friend shared some recipes for all-natural Huaral ham and sausages.

In August 2008, Edmundo got his first loan from ECLOF Peru’s Northern Lima branch. He has recently taken a second loan of US $343 through solidarity group ‘La Solidaridad del Gramadal’.

The money from the business is funding

Edmundo’s 13 year old daughter Yasmin through school.

“Edmundo is very responsible. He is also a very amiable person and a valued member of his communal bank”, says ECLOF Peru’s Credit Analyst Jessica Correa.

Speciality sausages prove a hit in Peru

“Our dream is to own and run a little supermarket”

Edmundo Campos makes high-class

sausages for Lima’s middle classes.

With his savings, he’s putting his

daughter through secondary school

The money from the business is funding Edmundo’s 13-year-old daughter Yasmin through school

Doris has built a loyal following for her special brand

of corndough snacks, tamales.

She is pictured here with her son

Jesus Alberto

NEWHORIZON | July 2009

A Muslim woman has secured her sons’ education by setting up a shoemaking factory from her own home.

Fawsul Inaya, from Sri Lanka’s North Western province, employs 15 Muslim villagers from home while her husband works as the local headman.

Fawsul decided to top up husband Hamdeen’s modest government salary by making shoes, a craft she learnt from her parents.

The 39-year-old mother of three is now on her second ECLOF loan. In April 2009 she borrowed Rs50,000 (US $435) to buy leather and faux leather fabric (rexine). In March 2006, she bought a sewing machine with a Rs20,000 loan.

The couple’s modest little house - in Pahamune in Kurunegala District - is a hive of activity. A team of six women and nine men work from the family’s small home making 60 pairs of shoes a day in three styles. Shoes and leather are piled up everywhere.

The business has paid for the Inayas’ sons to go to school and for la foundation for the family’s new home. The Inayas’ eldest son Asir, 19, is in an

advanced class at Narammala Central College. And both Ijas, 12, and Fayas, 7, are in good schools.

The couple plan to move to a better brick house nearby with a corrugated iron roof. The business can then take over their current home.

ECLOF Lanka’s Credit Manager Daya Chandrakumara was impressed with the quality of Fawsul’s shoes when visiting the business.

“Her shoes are much better than factory-made ones, and they last longer,” she said. “She can always find a market for them.”

Programme Manager Gamini Samarasinghe said the team are impressed with Fawsul’s pleasant manner and enterprising spirit. It’s still a novelty for a woman, especially a Muslim woman, to run a shoe business, he said.

“Generally, in the Muslim community the men work and earn for the family and women care for the children and manage the home,” he said. “But Fawsul has taken the initiative to start a business and earn for herself.”

Muslim mother’s shoe business pays her 3 sons through school

Fawsul Inaya (centre, in the yellow shawl)

employs six village women in her shoemaking

business

MEET THE CL IENTS PARTNERSHIPS

A visiting official from the Church of Sweden has praised EClOF Philippines for helping the rural poor get enough to eat.

Microfinance Advisor Per Söderberg said lending to poor farmers is a safe financial bet and also ensures the most needy get help.

“EClOF has found a good niche with good returns and that is where we believe EClOF should be – providing financial services for poor agricultural workers,” he said.

In April 2009, Per and his colleague Staffan Schelin visited projects from the Benguet branch. Per and Staffan, who is Finance and Projects Officer, met farmers growing broccoli, chayote and cut-flowers in the Tuba area.

They also met strawberry farmers in la Trinidad – which is dubbed the ‘strawberry capital of the Philippines’. The farmers sell their homemade strawberry jam and wine, and they charge tourists a little to pick their own fruit.

Per praised EClOF for its close links with clients’ local churches.

“EClOF Philippines embodies one of the core features of EClOF that makes it unique among MFIs: its affiliation and cooperation with local churches,” he said.

BREaD FOR THE WORLD vISITS PHILIPPINES FOOD PRODUCERSVisitors from a German campaigning charity have met Filipino students, waste recyclers and hog and rice farmers whose work EClOF finances.

In November 2008, two visitors from Bread for the World talked to over a dozen clients from the Greater Manila and Palawan branches.

Editor Thorsten lichtblau and photographer Christof Krackhardt were keen to see projects that protect the poor from hunger, and that help farmers grow more food. FIND OUT MORE:http://www.brot-fuer-die-welt.de/english/index.phphttp://www.svenskakyrkan.se/

Partner praises ECLOF Philippines for helping rural poor and hungry

In 2008, ECLOF Philippines has

disbursed loans worth more than

US $500,000 to rice farmers in

the province of Palawan

Photo: C

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Solidarity group for Muslim women

Fawsul borrowed through the solidarity group Al-Madeena Muslim Women Society (Al-Madeena Muslim Kantha Karya Sanvidhanaya).

She was one of 49 group members who took out ECLOF Lanka loans in April 2009. Many of the women have asked Fawsul and her husband Hamdeen for advice on how to grow their businesses.

The supported projects include: fruit nursery, spice processing, poultry, carpet making, wicks making, dress making, soap selling, a shop, making boxes, school canteen, collecting bottles, sweet industry, making paper bags, garments selling, vegetable selling, collecting old iron and ice cream selling.


So what may shield us from the crisis?1. We check our clients’ finances more

thoroughly The US banks involved in the subprime fiasco failed to check house buyers’ abilities to repay their mortgages.

2. Our clients’ businesses are more tangible so loans should continue to be repaid as long as we only fund credit-worthy customers.

“When we give a loan of US $100, behind the US $100 there are chickens, there are cows. It’s not something imaginary,” said Professor Mohammad Yunus, in The Economist in March 2009.

3. Steady investment growth According to the Consultative Group to Assist the Poor, investors have been putting more money into microfinance. In 2006, foreign-capital flows were US $2 billion, compared with only US $600 million in 2004. Some insiders have claimed this means microfinance is recession proof.

How is the financial crisis trickling down?But microfinance has taken a knock. Since social donors and private investors have been reducing microfinance budgets and diversifying their portfolios. Big banks have been tighter with MFIs – even for good repayers.

An Indian newspaper, Daily News and Analysis –(http://www.dnaindia.com/), reported in April 2008 that small MFIs are starting to have problems getting new loans from banks or renewing their one or two-year liabilities.

Some MFIs borrow in US dollars. Because the dollar has risen against most developing countries’ currencies, MFIs that owe dollars could be in trouble. For example the Mexican peso lost over a third of its value against the US dollar in the three months since October 2008.

How else is the financial crisis affecting developing countries? Rising unemployment in developing countries means people have less money to spend. So sales may be down for the budding entrepreneurs we lend to. And jobless people in developing countries may be forced into unstable, poorly paid work.

And rising unemployment in rich countries is also bad news for microfinance clients. Unemployment

The financial crisis: why microfinance should stay on courseSince major banks have collapsed or had to cut jobs, journalists have asked whether microfinance might suffer the same fate too.

Microfinance experts seem split on the question. Some have predicted that microfinance will be immune to the financial crisis. While others fear there will be a trickle-down effect. On balance, a spirit of cautious optimism could be the wisest way forward.

HOT TOPICS

Bolivia is an example of

microfinance success

could go up by 20 million by the end of 2009. So says the International Labour Organisation, which predicts the jobless tally will reach 210 million by the end of this year.

As the US and Europe stops building new buildings and making cars, immigrant workers from poor countries have been the first to lose their jobs. Many micro-businesses have been reliant on money sent home from relatives working overseas. Small businesses in the Philippines, Colombia, Guatemala, Mexico, Ghana and Nigeria are especially at risk.

The UN fears education, health and social care could suffer in the developing world. That’s because the national governments can’t borrow so much from banks and because their economies will slow down in the recession. The report for the UN, “Impact for Social Development” published in 2009, says that the poor will be hardest hit by the financial crisis unless they have a safety net.

Helping microfinance stay healthyThis economic crisis is our biggest opportunity and challenge. It could be our chance to show how:• You need to know your clients and their situation• Credit risks should be controlled• Banks can help poor people in rich countries too

We should persist in our good work. After all, microfinance has grown with little help from commercial banks. So we should have some immunity from their crisis.

We need more schemes to support microfinance through tough times. The International Finance Corporation (IFC) and German development bank (KfW) have set up a US $500 million fund for MFIs. We need more of this.

Traditional banks have got a lot of government help and attention. But what’s being done to support MFIs? And how about including microfinance in the billion-dollar rescue packages for banks?

Microfinance and its supporters should rally government to secure our funding for the coming years. People on low incomes need loans more than ever to face tough times ahead. And who knows the financial needs of poor people better than MFIs?

Juan Forero Programme Executive, ECLOF International

A city client in Ecuador. Many micro-businesses

rely on money sent home from

relatives working overseas

See also

• The Economist “Sub-par but not subprime”, 21 March 2009 -http://www.economist.com/displaystory.cfm?story_id=1334221

• “Impact for Social Development” papers published in 2009, for the UN. Produced by the Commission for Social Development

Dairy farmers in India are benefiting from micro loans


Patrick Awuku Dogbe Head of Microfinance Programming

“Hear the voices of the voiceless and see them smile because you have transformed their lives through microfinance. I am happy to join the ECLOF family in making this vision a reality.”

Patrick is a chartered banker and joins us from Ghana to head up microfinance operations across the world. He reports directly to the Executive Director.

He was Head of Operations at Opportunity International Savings & Loans Ltd. – Ghana, part of a global microfinance network.

He has worked with Stanbic Bank, the Trust Band Ltd and Bank for Housing and Construction.

He served on the board of a Rural Bank for 10 years and of three microfinance institutions in Ghana for 5 years. His credentials include: • BA in Accounting and Economics• MBA in Finance• Diploma in Business

Development Services• ACI- Dealing Certificate• Chartered Institute of Bankers

and Chartered Institute of Administration and Management Consultants - Ghana.

Beatrice Chibawe-Mumpangwe Microfinance Project Coordinator

“I feel humbled to a part of the ECLOF family but also grateful for the chance to serve humanity globally.”

Zambian national Beatrice will link partners with National ECLOFs, to ensure they all get what they need from the relationship. She reports directly to the Executive Director.

Beatrice has been a marketer and administrator for over 10 years. She has worked for BP Zambia and CETZAM Financial Services Ltd (a member of Opportunity International). Beatrice has• a diploma in marketing with

the UK’s Chartered Institute of Marketing (CIM)

• a diploma in public administration with the University of Zambia,

• a certificate in microfinance• certificates for customer care,

safety, ISO and quality.

As well as the UK CIM, she belongs to the Zambia Institute of Marketing. She is studying for an MBA in human resources management.

TaNZaNIa CHaIRMaNAminiel N Mungure

“I am happy and grateful to be part of ECLOF. I often like to compare MFIs’ work to the story of Jesus feeding multitudes with five pieces of bread and two fish.”

Amaniel replaces Israel Ole Karyongi. Amaniel is Chief Financial Officer at the Arusha Lutheran Medical Center. Previously he served for 25 years at the Evangelical Lutheran Church in Tanzania. He rose up the ranks to Secretary General.

Aminiel has an MBA in Finance from United States International at the University of Nairobi, and an accounting BA from Dar es Salaam.Amaniel wants to:• Develop manuals to guide in

management, growth and governance.

• Build a motivated and committed team to reach optimum productivity.

• Grow the operations zone to reach more poor people.

• Maintain balance between serving marginalised rural and urban groups.

Two new faces in GenevaA warm welcome to new two staff members at the EClOF secretariat who will fill newly-created roles to help National EClOFs run smoothly and work well with external partners

PEOPLE MOVES

Staff at Kenya ECLOF have contributed 900-days’ worth of food to the relief effort to feed millions of starving Kenyans. NEC staff were so horrified by TV footage of starving Kenyans that they clubbed together to buy staple foods.

“We watched in shock how people were cooking mangoes, pawpaws and wild fruits as their daily meals. Not forgetting others who are just boiling water as a meal,” says the NEC’s Executive Director Rose Wanjohi.

“Those pictures of starving brothers and sisters followed us at home and at work.”

Some 90 Kenya ECLOF employees donated money for maize flour, green grams, rice, cooking oil, salt and porridge flour. The food packages were enough to feed 300 adults for 3 days.

Internal Auditor Alphonse Opinya and Operations

Manager Judy Mmosi pulled together the efforts to bring the food to the local Red Cross for distribution.

Nearly 6 million Kenyans are in danger of famine, according to the United Nations’ World Food Programme. A massive drought last year and post-election violence brought on the famine. Most of the 600,000 people displaced by the riots are farmers. Many are still too afraid to go home to their lands.

ECLOF’s Nairobi head quarters is continuing to co-ordinate food donations from office and field staff. Rose says many staff have collected more food on top of the official ECLOF donations.

“We may not have the muscle to buy tons of food to take them directly to people,” says Rose. “But we belive in giving back to the people we serve through our work.”

Kenyan staff collect food for the hungryStaff rally round to help the millions living on fruit, berries and water

“Pictures of starving brothers

and sisters followed us at

home and work”

ECLOF NEWS

A former electronics technician has built up a thriving transport business in Antipolo City after escaping the clutches of loan sharks.

Ireneo Delfino was working for his father when he decided to set up his jeepney business. But repaying the loan sharks was crippling Delfino and Partners.

With EClOF Philippines’ support Ireneo has since bought 6 more passenger jeepneys, 15 tricycles and a sari-sari store, which his wife Teresa runs.

EClOF Philippines staff have been impressed with Ireneo’s hard work and talent for diversifying over the past six years.

“He knows how to handle his business well,” says Project Officer Jun Penilla. “If there’s an opportunity to open another business he will grab it. He’s a risk taker but it serves him well.”

The business is now paying off its fourth loan with EClOF, this time for PhP 80,000 (uS $1,600). This 12-month loan is helping Ireneo repair his vehicles and invest in his sari-sari store. The extra income should help secure the futures of Ireneo’s four children, aged eight to 14.

Ireneo has referred other drivers to EClOF to save them from loan sharks. EClOF Philippines has 20 clients who are jeepney drivers.

Jeepney business escapes loan sharksA Filipino jeepney driver has branched out into passenger tricycles and a shop, thanks to four loans from ECLOF

Jeepneys are colourful taxis unique to the Philippines. The original jeepneys were customised US army jeeps left behind after the Second World War. Today Filipino engineers custom-build jeepneys from spare parts. A new jeepney is expensive – ranging from US $5,000 to US $8,000. (pictured: Ireneo Delfino and one of his drivers)

ECLOF INTERNATIONAL150 route de Ferney, 1211 Geneva 2, Switzerland

Tel: +41 22 791 6312 Fax: +41 22 710 2005 Email: [email protected]

Photo: C

hristof Krackhard

t/Brot für d

ie Welt

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